3. Should united by blue raise the wholesale price of its t-shirt from $14.50 to
ID: 375590 • Letter: 3
Question
3. Should united by blue raise the wholesale price of its t-shirt from $14.50 to $16.50? Expalin..4. If linton decides to raise the price of the United by blue’s t-shirt, what steps should he take to communicate the price to the company’s retailers and its final customers?
Case United By Blue Can an Eco-Friendly Apparel Company Afford to Stay Mission Focused in the Face of High Costs? in India, cost more to make and package because Linton used softer, more than the traditional jersey cotton that moNEL make T-shirts. He also insisted on grew up in Singapore and Japan and, even as in any of the company's packaging to travel the world and go to a lot of different from recycled elephant dung that is infused wih of ild, beaches," he says. "I loved all things aquatic and had about my room. These experiences put me in beautiful as well as places that were so littered with trash that fowers. The banana fiber wrappin f g alone costs 50cm 50 times the cost of a plastic bag. In addition, cact United By Blue sponsored 100 lap couldn't see the sand. Seeing trash and polluted oceans significant expense for a smal less than S1 million especially discouraging for me." In 2006, while still a student at sared Sand Shack, a busness that jewelry to stores along the East Coast (and sells beach-themed iew that he still owns). He donated a portion of the company's sales w to nonprofit organizations dedicated to ocean conservation but turn would mean that retailers applying the standad would have to raise its wholesale price to $16.50 wanted to "do something that was more concrete and tangible By Blue, an eco-friendly would charge customers a final price of $34 for United B T-shirts. He realized that raising the wholesale probably would cause two of the company's largest co than giving money to nonprofits," he says In 2010, Linton launched United apparel company, with the idea that this business would be dif Urban Outfiuers and Whole Foods, which together ferent. The name Linton gave his company is inspired by 25percent of United By Blue's sales, todrop the lief that water unites all of humankind. The water of the world is what we all need to live." he says."It's what unites every around 60 percent." he says. Losing major retailers aso wod thing, and it's often the most mistreated part of the world." In fact, people dump an estimated 14 billion tons of trash into the earth's oceans each year, and Linton wanted to do something make selling to small, independent shops more ffic weil well. "[Having big-name retailers as cusamen helped build legitimacy," says Linton. If he raised prices,th! it. Rather than merely give away money that may or hay pany's small retail shops might drop the line as weill I not accomplish worthy environmental goals, United By Blue, s based in Philadelphia, would associate a tangible envi not raise prices, he estimated that U out of cash in less than six months. Another option is to b ronmental action for every sale that it makes. Linton pledged to sponsor cleanups that would remove one pound of trash (which primarily is plastic) from the world's oceans and waterways for every product that United By Blue sells. "Our cleanups are the bedrock of our company and allow us to engage with thousands of volunteers and inspire participation in the "blue' movement," he says. So far, the company has hosted nearly 100 beach or waterway cleanups and has removed more than 140,000 pounds the shirts, cost by using less expensive plastic bags and tags and traditional jersey cotton, which also has a nepse impact on the environment. United By Blue has 50 deag events planned for the upcoming year, and eliminatig e would save between $100,000 and $250,000. Howcer these changes would go against the company's mission und e that Linton started United By Blue in the ta reason "Our cleanups are the bedrock of our company," he says grand vision is to use impact on this world. the power of business to leave years after starting United By Blue, Linton was ana lyzing the company's financial statements and noticed some- thing alarming: Its wholesale gross profit margin had shrunk 60 percent to just 15 percent, a pattern that was unsus- Questions tainable. T-shirts are the company's best-selling products, and C8-1. What risks does United By Blue face if Linoe riss customers who believe in the company's mission are buying them through retailers such as Urban Outfitters, Whole Foods, prices of its T-shirts? What risks does the compr… if it fails to raise its T-shirt prices? and other small, independent shops for a retail price of $29.50. C8-2. Should Linton abandon United By Blue's missce United By Blue sells the shirts to retailers for $14.50, but some of the company's larger customers receive discounts and pay ess. The environmentally friendly T-shirts, which are produced active, eco-friendly apparel company to lowe of the company's T-shirts? whatare risks of approach 42
Explanation / Answer
3.
United by Blue should not raise the prices of t-shirts. Instead it should look at increasing efficiency of manufacturing and distribution to reduce costs. It could also look at renegotiating the manufacturing contracts to opt for cheaper sourcing in order to remain sustainable. It may also look to raise funds through private investors for the company’s business to ensure they don’t run out of cash and at the same time look for driving efficiency to reduce costs.
4.
If Linton decides to raise the prices of the t-shirts, then United by Blue should embark on an aggressive campaign to make people aware of its business and its objective of making a difference to the world and its environment. It should also emphasize how the increase in price helps in sustainability and the retailers who are helping them in this purpose.
By doing the above marketing exercise, they would be able to gain positive spotlight from people, who are concerned about environment. Also it will show wholesalers and retailers who co-operate with the firm in a positive way thus incentivizing them to remain engaged with United by Blue.
C8-1. Risks that United by Blue faces on raising the price:
Risks that United by Blue faces on not raising the price:
C8-2. Linton should definitely not abandon United by Blue’s mission to be an active eco-friendly apparel company to lower costs of t-shirts as that will compromise the bedrock of beliefs that company was founded on.
This will lead to:
Hence it is imperative that United by Blue sticks to its approach and tries to come out stronger while maintaining its commitment to being eco-friendly.
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